Banking

What is Simple Interest? Simple interest is calculated based on a loan’s principal or the initial deposit into a savings account. Simple interest doesn’t compound, therefore a creditor will only charge interest on the original amount, and a borrower will never be required to pay further interest on the interest that has already accrued. It […]

What is Cash? Money other than checks or cash equivalents, such securities, commercial paper, government bonds, etc. A physical form of currency approved by the government for use in the exchange of goods or services, such as coins cash bills. In business, it is known as the most liquid asset because it can quickly pay off all expenses using cash. Cash is the most important record of a company. Cash is

What is Accounting Profit? Accounting profit is defined as the total earnings of a business after deductions of explicit costs. Explicit costs are expenses that directly affect the profitability of a business. In other words, accounting profit is the profit left over after deducting expenses from revenues, following the Generally Accepted Accounting Principles (GAAP). The

What is a Merchant Bank? A merchant bank is a financial institution that offers banking services and consultancy for corporations and high-value clients. Merchant banks offer loan services, financial advice, underwriting, and fundraising for their clients. Unlike commercial or retail banks, merchant banks do not offer their services to the general public. The main target

When it comes to managing my finances, understanding the differences between charge cards and credit cards is crucial. With a charge card, I know that I must pay off the entire balance each month, without the option to carry a balance over time. This can be both a blessing and a curse – it ensures

When it comes to choosing between a credit card and a debit card, there are a few key differences to consider. With a credit card, I can make purchases on credit, essentially borrowing money from the card issuer up to a certain limit. This can be handy for managing cash flow and building credit history,

A Letter of Credit (LC) is like a financial safety net in the business world. It’s a promise from a bank that if you can’t pay, they’ve got your back. It’s handy for international deals, ensuring that both parties feel secure in the transaction. On the other hand, a Bank Guarantee is a bit like

Commercial banks and merchant banks play distinct roles in the financial landscape. Commercial banks, seen as the financial backbone of everyday life, cater to the general public by offering services like savings and checking accounts, loans, and mortgages. On the other hand, merchant banks are the sophisticated players in the financial arena, focusing on providing

The Bank Rate and the Marginal Standing Facility (MSF) Rate are like two siblings in the vast financial landscape, each with its unique role in the central banking family. Think of the Bank Rate as the older, wiser sibling, setting the tone for interest rates in the economy. It’s the benchmark rate at which the

Unit banking involves a system where a single, independent bank operates without any branches, catering to its local community. This model promotes a close connection between the bank and its customers but may limit services and geographic reach. Branch banking comprises a network of branches connected to a central or parent bank, allowing for broader